Summary
Boston Scientific Corporation (BSX) filed an 8-K on November 19, 2018, detailing the approval of its 2019 executive compensation plans. The key focus is on the 2019 Annual Bonus Plan and two new performance share programs: the 2019 Total Shareholder Return Performance Share Program (2019 TSR PSP) and the 2019 Free Cash Flow Performance Share Program (2019 FCF PSP). These plans are designed to align executive pay with company performance and shareholder interests, emphasizing metrics like adjusted earnings per share, global sales, total shareholder return, and free cash flow. The 2019 Annual Bonus Plan features a bonus pool based on corporate performance and is allocated down to individual units and managers, with individual awards determined by performance evaluation. Both performance share programs tie payouts to specific long-term and short-term financial goals, with the TSR PSP measured against the S&P 500 Healthcare Index over three years, and the FCF PSP against the company's own free cash flow plan for one year. Importantly, both plans incorporate clawback provisions, allowing the company to recoup awards in cases of executive misconduct, financial restatements, or as required by law.
Key Highlights
- 1Boston Scientific approved its 2019 Annual Bonus Plan, linking executive cash incentives to adjusted EPS and global sales performance.
- 2The 2019 Annual Bonus Plan has a bonus pool with a ceiling of 150% and a floor of 50% of the aggregate target, with discretion for the Board.
- 3The company established the 2019 Total Shareholder Return Performance Share Program (2019 TSR PSP) to align executive pay with TSR relative to the S&P 500 Healthcare Index over three years (2019-2021).
- 4Awards under the 2019 TSR PSP can range from 0% to 200% of the target award based on the company's TSR rank.
- 5The 2019 Free Cash Flow Performance Share Program (2019 FCF PSP) was introduced, tying payouts to the achievement of 2019 free cash flow financial plan targets over a one-year performance period.
- 6Awards under the 2019 FCF PSP can range from 0% to 150% of the target award based on free cash flow performance.
- 7Both the 2019 Annual Bonus Plan and the 2019 Performance Share Programs include recoupment (clawback) provisions for executive misconduct, financial restatements, or legal requirements.